One form of investment is in the xe2x80x9cfuturesxe2x80x9d market, which comprises a xe2x80x9ccontractxe2x80x9d to buy/sell a xe2x80x9ccommodityxe2x80x9d for delivery and/or settlement before some date certain in the future; where the contract price for that commodity would typically be actively traded between the present and that expiration date based on what the traders at that time expected the price to be at that future date. Prices of the traded xe2x80x9cfuturesxe2x80x9d contracts might typically change daily due to many factors or events including the anticipated (by uncertain) supply and/or demand of the product.
Future contracts exist now for many different commodities, including popularly traded contracts for food products (grains, meats, sugar, coffee, dairy products, etc.), for industrial products (copper, precious metals, timber, oil, cotton, etc.), and/or for financial products (currencies, interest rates, stock market indexes, etc.). The contracts can be traded from specific exchanges, with local traders in trading xe2x80x9cpitsxe2x80x9d completing orders in person and/or via an Internet connection between many local and remote traders (suppliers, users and speculators), at prices that commonly vary throughout every trading day before the contract expiration date. The futures contract might have a life measured in weeks, months, or possibly even a year or more.
A basic purpose of the futures contracts is to allow suppliers/users of the product to sell/buy such contracts, whereby they can xe2x80x9clock inxe2x80x9d a future price of the commodity and thereby eliminate the uncertainty and risk of doing business while facing an unknown future price.
Of importance, every commodity contract would be for a specific physical product of a specified quality and quantity, and would have both a real value if bought/sold on a cash market now and/or at the future settlement date. Existing future contracts typically represent a rather costly value of the commodity, such as a conventional grain contract for 5,000 bushels of soybeans priced at $5.00 per bushel would represent approximately $25,000 of product. However, as product delivery would take place only when the contract matures, futures contracts generally can be bought/sold for a fraction of this total contract value, via a xe2x80x9cmarginxe2x80x9d account.
Thus, depending in part on the price volatility of the traded commodity, specific xe2x80x9cmarginsxe2x80x9d are set generally between 5% and 20% of the contract value, or between only possibly $1,250 and $5,000 for each soybean contract. While this allows an investor with a smallish account to trade many future contracts, the high leverage margin/contract equity ratio imposes great risk. For example, a small percent contract price change (5% or $1,250 for example) will be reflected by this same dollar amount in the margin equity, as either a profit or a loss. Should margin equity be reduced to less than minimum maintenance requirements, the investor would be subjected initially to a margin call, and if not promptly met, then to being closed out from the under-margined contract. In a locked-in limit-move market, the contract might not be closed out until an investor""s margin equity turned negative, whereby the investor would not only lose the margin equity but yet owe the broker any resulting negative portion.
Of further importance, as every contract being traded (or xe2x80x9copenxe2x80x9d contract) is represented by a xe2x80x9cbuyerxe2x80x9d and a xe2x80x9csellerxe2x80x9d, movement of the traded market price in either and/or both an increasing or decreasing direction will cause an equal number of winning and losing contracts. Insiders might have or probably should have a better understanding and appreciation of many current factors that might influence the traded contract price, to place speculators somewhat as an underdog or disadvantaged investor. Even if this assumption should not be so, a xe2x80x9csmallxe2x80x9d investor with limited equity to lose is traditionally more vulnerable and at a great disadvantage versus a xe2x80x9clargexe2x80x9d investor. An old futures market adage is that xe2x80x9cthe market moves in the direction to hurt the most investorsxe2x80x9d, vis., the small investors who hold the fewest contracts per investor. Consequently, historically many small investors end up as losers, and their futures market participation can be quite short lived.
This invention provides an interactive futures trading game that can be played without the problems and pitfalls noted above, such as possibly losing more than an established margin equity, or experiencing unfavorable trading success because of large/small investor margin equity distinctions.
An object of this invention is to provide an interactive futures trading game having contracts for pseudo-commodities that do not represent any physical commodity and thus have no innate financial value, but instead represent a stated proposition or issue having only degrees, distinctions or opinions of resolution, whereby an initial price can be arbitrarily set for trading such issue contracts. Resolution of the pseudo-commodity issue might be affected by any of many possible or real independent events, factors or activities, so that should any possibly, eminently, or actually occur, the participating traders might change their opinions as to improving or decreasing odds of a resolution of the pseudo-commodity contract issue, and induce them then to buy/sell the contracts believing a corresponding favorable price change would likely occur in the traded contract.
A further detailed object of this invention is to provide an interactive futures type trading game having a central clearing house, that would regularly xe2x80x9cpollxe2x80x9d active participants to seek their opinions as to how the possible or actual occurrences of real life events, factors or activities might influence pricing and thus the contract buying/selling activities of the issue contracts; that would then tabulate and post the poll results, and possibly make known its opinion of the likely direction and amount in the traded contract prices because of the poll; that would tabulate and post trading prices and results; and that would handle, record and settle resulting contract trades among the participating traders, all primarily via a broad network media such as the Internet.
Another detailed object of this invention is to provide an interactive futures type issues trading game whereby the central clearing house and participating traders together regularly might create new and interesting pseudo-commodities issue contracts for additional future trading. This might include creating xe2x80x9cindexxe2x80x9d contracts representing composites of several specific actively traded individual pseudo-commodities issue contracts (such as a PerCap 10 Index contract comprising a composite price of the ten most active issue contracts), for allow yet additional variations or forms of trading.